Satellites have been spinning round the earth for decades, facilitating communication and navigation, monitoring weather, and giving us a glimpse into outer space. Nearly 2,000 active satellites are currently in orbit, and new applications are on the rise. Working together, financial institutions and agtech companies are envisioning ways to harness data to support rural farmers and shape a more stable food supply.

Geodata technology uses remote sensing satellites to track vegetation growth, weather, and soil moisture and quality. This type of information can provide farmers with tailored advice on all aspects of growing their crops. Applied to smallholder farmers, who don’t typically have access the most cutting-edge agricultural innovations, geodata technology can dramatically improve not only yields but their access to finance.

“Monitoring and loan payouts can be made more efficient,” says Albert Boogaard. In his role as Head of Innovation at Rabobank Foundation, Boogaard connects the latest data-driven technologies with smallholders in developing nations. He explains that financial institutions can use geodata to assess risk based on factors like crop suitability, and to track crop growth, “which should lead to lower lending costs and improved outreach, once again benefitting farmers.”

Recent developments in satellite technology

A number of factors have come together to make this application of satellites viable. Many remote sensing satellites are little bigger than a suitcase these days, making them relatively cheap to launch. Others can now ‘see’ through clouds – important in tropical areas, where cloud cover is the norm.

Access is another advancement. Crucially, the European Copernicus program began providing free high-quality satellite data in 2016. Data storage and analysis also plays a role. A platform like Google’s Earth Engine has unprecedented storage and computing power, performing calculations in seconds that used to take hours or days. And finally, it is easier to deliver the resulting insights to smallholder farmers thanks to increased access to mobile phones and the internet in developing countries.

Mobile ground control

Farmers can receive information on their phones by text message, interactive voice response (IVR) or chatbot in their own language, meaning illiteracy is not a barrier. They get up-to-the-minute advice on when to sow and harvest, how to make the most of expensive farm inputs like pesticides and fertilizers, and how to reduce food losses. The data also makes yield prediction more accurate for smallholders and farmers’ organizations, which improves planning and sales.

“The technology even helps farmers deal with climate change,” says Boogaard. “Monsoons and other weather patterns are no longer predictable, which means growing methods passed down from one generation to the next are no longer reliable.”

More affordable lending

Geodata is also giving smallholders access to financial products like loans and insurance, which are crucial if they are to invest in their farms for the future. Over time, the production and location data recorded by the satellites forms a farm profile. Banks can use these profiles to perform risk assessments based, for instance, on crop suitability.

Satellites can then be used to record crop growth throughout the season. Potential problems can be flagged – by images showing brown earth rather than thriving green crops, for instance. “Banks don’t have time to monitor all their clients, particularly those living in remote areas,” explains Boogaard. Using geodata, banks can prioritize farm visits and adapt loan payouts mid-season, rather than finding out a client is in default because of a poor harvest.

The technology also makes it easier for banks to differentiate amongst their clients and develop lending products adapted to farmers’ needs. But it is not just about applying new technology to existing financial models. “What’s perhaps even more interesting is the development of completely new service models around geodata. New players including mobile network operators, fintech companies, software suppliers and crop buyers are beginning to offer smallholder farmers loans.”

Testing, testing

The technology is still in its infancy and multiple proofs of concept are needed. Testing is complex due to the combination of different conditions on the ground, the various geodata technologies available, and end users’ diverse priorities. To that end, Rabobank Foundation is running a wide range of pilot schemes in East Africa with partners including the Netherlands Space Office and the Geodata for Agriculture and Water (G4AW) program.

The first companies providing geodata services are now operational, with thousands of farmers and cooperatives already accessing loans. In one of the Kenya pilots, Rabobank Foundation fintech partner Apollo Agriculture combines remote sensing with a digital distribution model including loans, farmer advice, farm inputs and insurance.

Space for farmers

“As part of a project with CTA and G4AW in Uganda, we bundled a Rabobank Foundation farm input loan to farmers’ cooperatives with insurance and advice,” says Boogaard. “The project is generating a wealth of technical insights, but also confirms that we should not forget the farmer’s perspective. He or she often faces so many challenges, that a service like this is not always the first priority.”

Nor is geodata a one-stop solution for farmers seeking to qualify for credit. Financial institutions still check field data including a farm’s location, type of crops being grown, inputs used and the farmer’s level of knowledge. And they want details of a client’s financial history to minimize potential risk.

“Farmers will never be financed based on geodata alone,” admits Boogaard. “One of the goals of the pilot schemes is to pinpoint exactly where the contribution is large enough to build sustainable business cases for all parties involved.”

Finding more user-friendly solutions

Meanwhile, end users at the bank just wants a system that works: one that combines different data streams and tells them what they should do with the information. “We need more user-friendly applications for geodata to really take off in the financial sector,” predicts Boogaard.

To stimulate companies to develop meaningful applications for the financial sector, Rabobank Foundation is co-sponsoring the NPM Geodata for Inclusive Finance and Food Challenge. Its partners are the Bill & Melinda Gates Foundation, FMO (a Dutch entrepreneurial development bank) and development agency ICCO.

The winners of the Challenge gain access to funding, knowledge and network support to rollout their product. They will be announced on November 2 as part of the Accenture Innovation Summit.